Would you create an Ad without knowing whom you are trying to sell to? You could. But you wouldn't be very successful.
This is the same when it comes to selling your business. Far too often, owners will scrape together a listing Ad without considering what type of Buyer is right for their business.
The result? Your business gets overlooked because you are not speaking the language of Buyers.
In this article, we examine how to talk to the 4 different Buyers of Mainstreet businesses.
Determining the right buyer for your business
To determine your buyer persona you need to answer 3 questions:
- What is your current involvement in the business? (owner/operator, hands-off, part-time, etc.)
- What is the future of the business? (Growth or steady & stable?)
- What makes your business attractive to purchase over another? (high margins, work-life balance, strong reputation, opportunities to grow)
These answers will help you identify which Buyer Persona is right for your business.
Strategic Buyers
Strategic Buyers aren't interested in every business (such as coffee shops). But many Sellers forget about possible strategic purchasers for their business.
Like Lifestyle Buyers, Strategic Buyers care more about the strategic 'fit' of the business. Rather than the financial strength of the target business (within reason). This makes it important to highlight the qualitative aspects of your business.
What to highlight
- Revenue Breakdown: customer concentration, demographics, recurring revenue vs. one-time contracts, etc.
- Your long-term vision for the business and the steps to get there
- Company culture, internal talent, etc.
What to avoid
- If you are an owner/operator don't talk about leaving the business right away. As (most) Strategic Buyers will want to hire you for a longer transition period.
Where to find them
- Start by creating a list of all the relevant competitors. Next, create a list of businesses where your products/services would make a nice 'add-on'. This list can include businesses operating in adjacent industries.
Lifestyle Buyers
As the name suggests, Lifestyle Buyers are searching for work/life balance. These are often Buyers 'down-shifting' from a larger business but not ready to retire. The best strategy is to paint a picture of their life if they were operating your business.
What to highlight
- How many hours you work per week, how many weeks you take off per year, etc.
What to avoid
- For Lifestyle Buyers, you don't need to pitch them on your 'grand vision' for the business. Instead, focus on what matters to them - being able to choose how much time they spend working on the business.
Where to find them
- General business-for-sale sites work well. Include wording such as 'great lifestyle business' to grab their attention.
Financial Buyer
Financial Buyers are looking for profitable business opportunities. Most are willing to move for the right business - which gives you a global pool of buyers.
Note: these Buyers are especially diligent when it comes to your financials. So get your books in order.
What to highlight
- Profit margins (gross & net), customer acquisition costs, expenses as a % of revenue, financial projections, etc.
- Your earnings (SDE/EBITDA) and your asking price multiple (don't worry we calculate this for you automatically in DealBuilder).
What to avoid
- Financial Buyers are looking for consistency of earnings. So don't pitch your business as being super-profitable if it has only been profitable for 1 of the past 5 years.
Where to find them
- Financial Buyers live around the world, make sure to advertise on sites with a global reach.
- It can also make sense to work with a Broker, as they usually have a Rolodex of Financial Buyers.
Entrepreneurial Buyers
Entrepreneurial Buyers usually come with 2 different backgrounds:
- Corporate Execs
- Serial Entrepreneurs
Both are seeking growth opportunities where they can apply their personal expertise. Usually self-funded, these Buyers seek businesses with $0 - $500K+ in earnings.
What to highlight
- Describe the ideal skill set of a new owner. Similar to a job posting, you want an Entrepreneurial Buyer to think 'this business is perfect for me'
- Discuss ways to grow the business, marketing opportunities, etc. As these are things that interest Entrepreneurs.
What to avoid
- For many Mainstreet businesses, Buyers are often buying themselves a job. This doesn't interest Entrepreneurs, especially those from the Corporate world.
- What makes your business sound like a job? You have a very rigid schedule of tasks and responsibilities you must perform each day. Your hands 'touch' every sold product or service. This is a problem many specialized services (like Hairdressers) face when selling.
Where to find them
- Entrepreneurial Buyers live in your local community. They also tend to browse various business-for-sale sites
- You can also find niche communities of Entrepreneurial Buyers such as Searchfunder.com. Check to see if there are any specific communities for your industry.
Ready to get started?
Once you've determined your Buyer Persona(s) - it's time to create a presentation for Buyers.
Get started with DealBuilder - the easiest way to impress Buyers and ensure confidentiality. You can see for yourself by reading our DealBuilder case study, how to sell a company in 5 days.
